PHOENIX, Arizona—The 2009 Lodging Conference began with an optimistic eye toward the future and, more specifically, recovery. That was the first topic at hand during the opening general session held at the Arizona Biltmore.

“Following every downturn ever in the hotel business, we’ve had a great upturn,” said Tom Corcoran, chairman of FelCor Lodging Trust, when 

Tom Corcoran

From there, the conversation deviated into much more diverse fare, ranging from discounting to international development to bastardization of the boutique segment. Here are 11 key topics that were top of mind for panelists:

Rate. Corcoran said rate—namely, the inability of owners to maintain rate integrity—is the single largest issue for the industry. “Until we can, we’re not going to turn this industry around.”

The luxury core. The return of its core base of corporate travelers is critically important to the luxury segment, said Tom Storey, president of Fairmont Hotels & Resorts. Nowhere is that more true than in North America. Elsewhere, a lack of supply in some emerging markets has presented opportunities for international development. And while those opportunities still are tempered by the global recession, Fairmont has shifted its focus accordingly, and Storey said the chain “will see continued luxury growth.”

Midscale goes global. It’s not just the luxury segment that’s looking to expand outside North America. The midscale segments provide equally viable, if not more viable, vehicles for international development, said David Kong, president and CEO of Best Western International. This is particularly true in emerging countries like China and India, where there’s not enough supply to meet the needs of burgeoning middle classes. Roger Bloss, president and CEO of Vantage Hospitality Group, agreed: “There’s a tremendous appetite for properties in the midscale segment over there.”

Flood of foreclosures (or a lack thereof). Despite earlier prognostications that suggested a wave of foreclosed assets would flood the market, significant transactions have been few and far between. Corcoran attributed this, in part, to relationship banking. Some 55 percent of owners are lending from someone they know and trust, and thus, “if you’re a good operator with a good product, you’ll probably be able to work something out,” he said. Other lenders have chosen to “extend and pretend” in fear of taking back their assets. If, however, the recently introduced commercial mortgage-backed securities revisions allow special servicers to provide financing to third parties, that should get some transactions rolling, Corcoran said.

Franchisee incentives. How aggressive will certain franchisors be to get their pre- and mid-downturn prototypes off the ground? “You’re seeing it already. There are major brands that are offering discounts (to potential franchisees),” Bloss said. He warned that offering lower fees to entice owners would have the same effect lowering rates does on hotels: It might create interest in the short-run, but it will be much harder to raise those fees in the long-term. Furthermore, he warned that offering new franchisees discounts might create animosity among existing owners who likely are paying much higher fees.

Dirty words. Once a desirable qualifier of high-end hospitality, the terms “luxury” and “resort” have adopted a far more negative connotation in the aftermath of an AIG boondoggle and other misspent Trouble Asset Relief Program funds. To attract government business, Corcoran said some savvy operators have simply removed the words from their government contracts. A short-term fix, the strategy neglects a longer-term problem: the viability of luxury itself. The segment has been hit with a double whammy, he said. The rich aren’t as rich as they used to be, and businesses are far more reserved when it comes to corporate travel. “Those two dynamics are not going to go away quick,” Corcoran said. “But I do think, as our industry has shown many, many times, it will come back.”

Mark Harmon